Opinion piece by Roland Broemel: Data as prospects for digital central bank money (Börsen-Zeitung)

Central banks around the world are researching the framework conditions for digital central bank money, developing concepts and, in some cases, have already begun issuing them. The factors involved in designing digital central bank money are complex, ranging from the technical mechanisms for transferring virtual units, including interfaces for international transactions, to the circle of authorized users and the possibilities and modalities of use. The broad discussion also initiated by the European Central Bank (ECB) enhances their quality, but should take a closer look at the relevance of the data including the perspectives, contexts and concerns associated with them, as Prof. Roland Broemel writes in a guest article in the "Börsen-Zeitung".

The European Central Bank (ECB) is currently investigating options for the introduction of a digital euro that leave existing market structures unchanged as far as possible. As a search for the minimally invasive design, the ongoing research of the central banks has been pointedly characterized in a study from the circle of the Bank for International Settlements.From an economic perspective, the difficulty lies in establishing a digital euro as a means of payment without affecting the customer relationships of credit institutions, especially in the deposit business.

The institutionally higher degree of security of a digital euro compared with banknotes and coins, combined with the rapid exchangeability, could lead to a systemic bank run in the extreme case of a general loss of confidence, affecting not only a specific credit institution but deposits with credit institutions in general. Irrespective of the various estimates of the likelihood and avertability of such a system-wide bank panic, the security of digital central bank money suggests that it should at least also be used as a value-storing form of investment. The comparative advantage of business providers, on the other hand, lies in developing innovative, possibly particularly user-friendly payment methods and testing their market potential.

Against this backdrop, the ECB is striving for a technology-neutral design of a digital euro on which a wide variety of payment-related services offered by private providers can be based. In addition, a significant part of the research is dedicated to the question of how the uptake of the digital euro can be moderated. The digital euro should become successful, but precisely not too successful, so that it is used as a digital means of payment without significantly affecting the business models of established credit institutions, especially in the deposit business.This restriction of digital central bank money to the function of a means of payment corresponds to voices in the legal literature that concretize the ECB's competences on the basis of the model of embodied banknotes.

First of all, it seems obvious to extend the ECB's competence to authorize the issuance of banknotes that were historically intended to be embodied to the issuance of digital central bank money, if central bank money can be understood as a digital equivalent to the embodied banknote. However, to limit a digital euro to replicating the characteristics of its analog counterpart for reasons of competence would only insufficiently exploit the methodological possibilities of law to process structural changes in reality.

(Abridged version)

Börsen-Zeitung: "Daten als Perspektiven digitalen Zentralbankgelds"